Author: animeshjmathur

Velocity of Cash – Part 2

cash flow, Financial Independence

A few days back I had written a post on this topic. I have been working on seeing how the same money, multiplies itself just based on the velocity it can get.

FMCG companies are a perfect example of creating wealth due to the velocity of cash.

On a typical tube of toothpaste or a bar of soap,  each of these companies only makes a few cents. But because they sell to the distributors in bulk and realize their money, they invest it back again in  making more and selling more.

Their model is primarily driven by volume even though the per unit margin is very low.

If you look at these companies they generate so much cash, they give out such huge dividends on a consistent basis only because of their ability to generate velocity on the cash.

Cash if it’s kept stagnant in your home cannot generate wealth. Wealth can only get generated when cash keeps moving. If it’s moved into consumption items then it generates wealth for that entity. If it’s moved into productive items, then it will create wealth for you.

One of my philosophies of buying stock , similar to Peter Lynch, is to buy stocks of companies whose products I consume, so that some of the money that I spend comes back to me in dividend and capital appreciation.

Till next time then.

Carpe Diem!!!

Buying confidence with insurance

confidence, Fear, Insurance, Leverage, Risks

FEAR is generally caused by the unknown. What you are not sure off causes you to be uncertain. When you are uncertain you get fearful about the outcome.

Earlier I always used to talk about how investments would lead you to have the confidence to take the risks of life without being fearful .

However I have recently started analysing different kinds of risks that I face – so as we grow older, medical costs is a big issue. Next I have only one house in which I presently live – so there’s always the risk of a catastrophe that can hit.

I actually listed at least 5 or 6 different things which are high risks, that can suddenly wipe out my savings and investments.

Based on the ideas given by Garrett Gunderson, in his book Killing Sacred Cows, I have gone about figuring out if there’s insurance available to me to cover each of those risks.

While I knew about health insurance, I didn’t know about the concept of top-up that can add a quantum leap in your coverage at a very small premium. The caveat is that you should have the base medical insurance in place. Since I identified the risk and put a value to it, I was able to identify a product which would give me coverage to that risk.

Once you can list out all your risks and start putting a monetary value to them, chances are that you may also get a company who will be willing to cover the risk for you at a price. Once you have covered the monetary value of the possible risk, then its no longer a risk.

Insurance is a different kind of leverage, you are covering a large monetary risk by paying a small premium.

Once there is no risk, the fear reduces. Once fear reduces, you get the confidence to look at bigger things and aim for them. Insurance helps you get that confidence.

Till next time then.

Carpe Diem!!!

Things happen for us – Not to us

Human Brain, life, Worry

Tony Robbins has a saying to the above effect, signifying that instead of feeling like a victim, learn and take something out of it. I have another belief on similar lines, which is God does everything for our own good. Whether you believe in God or not is a separate issue, but things do work out eventually.

Today’s is a prime example. Since I got up today , early morning I was informed of an unscheduled visit for a meeting with some government officials. The original meeting as per my understanding was for the next day.

What was agitating was the fact that I had two meetings scheduled in the afternoon with some other customers. My team had got these meetings after a lot of effort and as a matter of principle, I don’t like the idea of cancelling a meeting with a customer. I was worried and irritated.

Since the meeting with the government officials was critical for our customer, I had to relent. I then started dialling out my colleagues to stand-in on my behalf for the first meeting. Luckily for me the first meeting, which was at 3 PM, the customer himself sent out a request for change of date, since he had to take an unscheduled leave today. I was confident that I will be able to attend the second meeting which was scheduled at 5:15PM

So I told the officials whim I was visiting that I would be out of the meeting by max 4PM since it takes about an hour’s drive. But the discussions continued and I was finally able to leave by 4:25. Now I was again in a quandary. I again dialled out my colleagues to engage the customer till I reached.

Now comes the interesting part. I was able to luckily reach home and join the meeting at exactly 5:15PM and the customer’s team had not arrived. So instead of me apologising for the mess up, I was on the high ground waiting for them.

Moral of the story – sometimes you should let things happen as they are happening without getting to anxious about it. There must be something good for you with you cannot see at the moment. In today’s situation I was able to satisfy one of my largest customer’s inspite of the fact that it was an unscheduled meeting, I could keep my principle of not cancelling meetings unless unavoidable and now tomorrow I have the full day which I can use to finish some other work.

Till next time ….keep the faith – life is happening for us not to us.

Carpe Diem!!!

Marketing is Education – Part 5

differentiation, education, Marketing, Methodologies, Positioning, route to market, travel, Trust

In my first 3 posts I was talking about the concept of how education can elevate your position in the market. I have used consultants as examples, I have used Indian brands also. Yesterday I wrote about a French perfume company. Today I will talk about an internationally well known tourism industry brand Trip Advisor.

The best thing about TripAdvisor is that it never tries to sell you anything. You can go look at people’s reviews of hotels, places etc. You can figure out what people liked about a place, what were the best spots etc. All of this is very conveniently put up front. As a matter of fact if you will search about a given location or a hotel in a location – you will typically find Trip Advisor in the top 10 searches on Google. And this inspite of the fact that most of the other search results will talk about the cheapest fares etc.

Initially I used to look at the Trip Advisor ratings for a hotels. What were the other travellers talking about. Slowly I got hooked to the idea of going to the site for everything when I was planning a trip to a place which I had not visited in many many years.

Trip Advisor has a sister site called Viator. So while I was searching for the best places to visit, tickets and other possibilities in New York I also got an option to buy the Travel Pass from them. Guess what, I bought it from them.

If you go on the web to search, you would get a lot of deals giving the same pass at lower rates. But because Trip Advisor has created such a trust relationship because of their education and unbiased user reviews, I didn’t think of even looking for lower options. Now its a standard practice for me to see what Trip Advisor or Viator are offering , what are the user ratings and then buying it from there.

Now does it mean that everyone who comes on the TripAdvisor site also ends up buying from them or their sister site. Absolutely not. And that would be true of all education based methodologies. Not everyone will buy from you. But that would be true for any methodology / positioning that you use. You could choose to have the lowest cost methodology for your positioning, but you would still not get the whole market to yourself. These companies differentiate themselves with the education they offer and create what Jay Abraham calls as position of Pre-Eminence.

Since I like to work with and give business to people I trust, all the examples I have given, till date ,are of companies that have used education to create that trust with me.

Till next time then. See how you can use education to create a marketing pull for your product or service.

Carpe Diem!!!